Highlighting Our Success Swift Energy Company is an independent oil and natural gas
company engaged in the development, exploration, acquisition, and operation of
oil and gas properties. In the United States, we focus on the onshore and inland
water areas of the Louisiana and Texas Gulf Coast, and in New Zealand on the
North Island’s Taranaki Basin. Founded in 1979, our company has its principal
headquarters in Houston, Texas. MISSION AND GOALS Over the last five years, we have achieved an average compounded growth rate in proved oil and gas reserves of approximately 5% per year, and in 2006, we increased our year-end proved reserves by 7% from the previous year-end to almost 817 billion cubic feet equivalent (Bcfe). Because our company has been able to build a high-quality portfolio of oil and gas reserves during a period of tight supplies, we have achieved five-year compounded growth rates of approximately 9% per year in production, 27% per year in oil and gas sales, and 25% per year in cash flows from operating activities. Going forward, we have assembled a database of three-dimensional seismic data covering 4,000 square miles in South Louisiana, creating a strong foundation for sustained growth. Over the next five years, our primary strategic goals are to increase our proved oil and gas reserves at an average rate of 5% to 10% per year and our production at an average rate of 7% to 12% per year.
BUSINESS STRATEGY Our mission of reserves growth is primarily accomplished through a mix of exploratory and development drilling and producing property acquisitions. The specific mix of drilling and acquisitions is continually adjusted in response to changing industry conditions and strategic opportunities. U.S. operations are generally focused in three regions—South Louisiana, South Texas, and Toledo Bend, a region spanning the Texas-Louisiana border. Within each region are one or more key properties, or anchor assets, that give us a strong base for developing the surrounding area. These include the Lake Washington, Bay de Chene, and Cote Blanche Island properties in South Louisiana, the AWP Olmos property in South Texas, and the Brookeland and Masters Creek properties in Toledo Bend. A fourth region of operation is in the Taranaki Basin of New Zealand and includes the Rimu/Kauri and TAWN properties. These anchor areas not only provide us with most of our production but also with the opportunity for reserves additions through continued development and exploratory drilling. In 2006, we focused the majority of our drilling activities in South Louisiana, and it will again be our most active region in 2007. In our acquisitions activities, we continually review opportunities to purchase strategic producing properties whose performance can be enhanced through further development and exploratory drilling or through improved operating efficiencies. This approach led to the purchase of our initial properties in AWP in 1988, Brookeland and Masters Creek in 1998, Lake Washington in 2001, TAWN in 2002, and Bay de Chene and Cote Blanche Island in 2004. In 2005 and 2006, we acquired interests in the South Bearhead Creek Field located in the Toledo Bend Region, and in 2006, we acquired interests in five additional properties in South Louisiana and increased our interests in our Lake Washington property.
INDUSTRY ENVIRONMENT Volatility in the prices of crude oil, natural gas, and natural gas liquids (NGLs) can have a significant impact on revenues and earnings from our operations. In 2006, the average domestic crude oil prices we received increased 20% to $64.28 per barrel. Average domestic NGL prices increased 14% to $38.70 per barrel, while domestic natural gas prices declined 13% to $6.44 per thousand cubic feet (Mcf).
In New Zealand, we received an average of $67.06 per barrel for our crude oil, an increase of 21% from 2005 levels. Average NGL prices increased 7% to $20.22 per barrel, and natural gas prices declined 3% to $2.99 per Mcf, primarily due to exchange rate variations. PERFORMANCE COMPARISON Our policy has always been to reinvest cash flows rather than pay cash dividends in order to promote long-term growth in the value of our common stock. Although industry cycles can have a substantial impact on year-to-year performance, we have achieved excellent growth in shareholder value in recent years. At the end of 2006, the three-year cumulative appreciation in our year-end stock price totaled 166%, comparing favorably with three-year increases in the Amex Oil Index (111%), the Russell 2000 Index (41%), the S&P 500 Index (28%), and the Dow Jones Industrial Average (19%).
INVESTOR INFORMATION Our common stock has been traded under the symbol "SFY" on the New York Stock Exchange (NYSE) since 1991.
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This page was last updated on Sunday, August 05, 2007, at 03:57:56 PM. Copyright © 1994-2008 by Swift Energy Company. |
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